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India Australia Trade

India Australia Trade Agreement

Last updated: Mar, 2023

Introduction

India and Australia are Indo-Pacific partners with a shared vision for a resilient, inclusive, open region. In the current fiscal year (2022), India is Australia's 9th largest trading partner, and Australia is India's 17th largest trading partner. Major exports to Australia include petroleum products, textiles and apparels, engineering goods, leather, chemicals, and gems and jewellery.

India-Australia Trade

  • The bilateral trade between India and Australia in goods and services stood at US$ 27.5 billion in 2021 against US$ 18 billion in 2020.
  • India's goods exports were worth US$ 6.9 billion, and imports aggregated to US$ 15.1 billion in 2021.
  • Australia occupies the 29th position in FDI equity inflows into India with a cumulative FDI amount of US$ 1,060.27 million from April 2000 – September 2022.
  • The bilateral trade between India and Australia (April – November 2022) stood at US$ 18,903 million.

Major exported items from India to Australia with amount & quantity

  • India exported 5,440 commodities to Australia in FY21.
  • India’s export to Australia exports grew 104.83% from USD 4.04 billion in 2020 to 8.28 billion in 2021.
  • Major exported items from India to Australia include mineral fuels, mineral oils & products; bituminous substances; mineral waxes (US$ 4,616.50 million); followed by pharmaceutical products (US$ 357.80 million); and pearls and precious stones/metals and articles thereof, imitation jewellery and coins (US$ 342.73 million) in FY21.
  • India’s export to Australia stood at US$ 5.15 billion during April-November 2022.
  • Major exported items from India to Australia include petroleum products (US$ 2,484 million) followed by drug formulations and biologicals (US$ 240 million) etc. during April-November 2022.

Major imported items by India from Australia with amount & quantity

  • India imported 1,968 commodities from Australia in FY21.
  • Imports from Australia to India were valued at US$ 16.7 billion in 2021
  • Major India's imports from Australia include mineral fuels, mineral oils & products; bituminous substances; mineral waxes (US$ 13,172.34 million); followed by pearls, precious or semi-precious stones/metals and articles thereof; imitation jewellery and coins (USD 927.31 million).
  • Imports from Australia to India were valued at US$ 13.7 billion during April-November 2022.
  • Major India's imports from Australia include coal, coke and briquettes (US$ 10,801 million) followed by gold (US$ 604 million) etc. during April-November 2022.

Recent Trends and Developments

  • The First India-Australia 2+2 Ministerial Dialogue was held on 11 September 2021. The dialogue reflected the growing convergence between India and Australia on security issues and a shared commitment to a free, open, prosperous and rules-based Indo-Pacific region.
  • On April 2, 2022, India and Australia signed the Economic Cooperation and Trade Agreement (IndAus ECTA) under which both countries are providing duty-free access to a huge number of goods and relaxing norms to promote trade in services. The Indo-Australia agreement is expected to increase bilateral trade from the existing US$ 27.5 billion to US$ 45 billion in 5 years.
  • India and Australia made a commitment during the Virtual Leaders' Summit held in June 2020, which was to have AISRF Special COVID-19 Round in 2020, pursuant to that, the AISRF Covid-19 special round projects (on Covid19 screening & diagnostic testing and cardiac marker) were announced in December 2020. Grants for round 14 of the AISRF were announced in March 2022, including in areas of quantum technologies, earth observation remote sensing, groundwater resources management and downstream processing, recycling and tailings reclamation of critical minerals, COVID-19 long-term health impacts, infection prevention and control, digital health and telemedicine, biomaterials (including bioplastics).
  • Prime Minister of India Mr. Narendra Modi and Mr. Scott Morrison, former Prime Minister of Australia held the 2nd India-Australia Virtual Summit on 21 March 2022. A joint statement was issued at the conclusion of the summit. The list of outcomes and documents announced/signed include MoU on Co-Investment in Australian Critical Minerals Projects between Khanij Bidesh India Ltd. (KABIL), India and Critical Minerals Facilitation Office (CMFO), Australia; MoU for cooperation and collaboration on broadcasting between Prasar Bharati, India and Special Broadcasting Service (SBS), Australia; establishment of the annual summit between India and Australia.
  • Minister of Parliamentary Affairs, Coal and Mines Mr. Pralhad Joshi visited Australia from 3-8 July 2022 and held a meeting with Mr. Madeleine King, Minister for Resources and Minister for Northern Australia to strengthen cooperation in critical minerals.
  • External Affairs Minister Mr. S. Jaishankar and Foreign Minister Ms. Penny Wong held the 13th FMFD in Canberra on 10 October 2022 during which bilateral, regional and multilateral issues of mutual interests were discussed.
  • The free trade agreement (FTA) between India and Australia, came into effect on December 29, 2022. The much-awaited deal between the two countries will bolster trade ties and will help boost bilateral trade in goods and services to cross US$ 70 billion in the next five years. The FTA deal will help both countries gain from exports and imports. The FTA between the two countries officially known as Economic Cooperation and Trade Agreement (ECTA) between India and Australia provides an institutional mechanism to encourage and improve trade between the two countries.

Economic Relations

  • The India-Australia economic relationship has grown significantly in recent years. India’s growing economic profile and commercial relevance to the Australian economy is recognized, both at the federal and state level in Australia. India is the 6th largest export partner and the 11th largest import partner as of 2020. While India has a surplus in trade in services with Australia, it has a deficit in merchandise trade, largely due to coal imports. Australian investments in India are currently pegged at US$ 15 billion, while India’s investment footprint in Australia is US$12 billion. The ECTA agreement with Australia has demonstrated India’s earnest desire, and industry’s confidence, to enter into trade deals where both countries gain, and give a solid basis for more trade pacts.
  • The India-Australia Economic Cooperation and Trade Agreement (#IndAusECTA) has come into effect from December 29, 2022. The Ind-Aus ECTA provides an institutional mechanism to encourage and improve trade between the two countries. It covers almost all the tariff lines dealt by India and Australia. India will benefit from preferential market access provided by Australia on 100% of its tariff lines, including all the labour-intensive sectors of export interest to India, such as gems and jewellery, textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices and automobiles. On the other hand, India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia, which are primarily raw materials and intermediaries such as coal, mineral ores and wines.
  • Australia occupies the 29th position in FDI equity inflows into India with a cumulative FDI amount of US$ 1,060.27 million from April 2000 – September 2022.

Conclusion

The relationship between Australia and India has developed rapidly in recent years, particularly under the impetus of India’s far-reaching process of economic reform and the resulting rapid globalization of the Indian economy. Both countries have grown in strength and importance and made rapid strides in all areas - trade, energy and mining, science & technology, information technology, education and defence. The year 2021-22 saw increasing depth and breadth of engagements in the bilateral, trilateral and plurilateral formats, with progress made on various initiatives including establishing new mechanisms for cooperation. In the coming years, the overall relationship between India and Australia will continue to grow and has the potential to assume greater prominence.

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